1. Field of the Invention
The present invention relates to a system and method for identifying and quantifying the benefits to a public sector entity from technology acquisitions. Furthermore, the present invention provides a methodology for guiding a public sector entity to realize the identified benefits from the technology acquisitions.
2. Description of Related Art
Public sector organizations operate with different priorities and pressures than those in the private sector. Specifically, the public sector organizations are generally charged with a specific mandate and utilize technology to help their organizations operate within these frameworks. Typically, public sector organizations usually cannot shift into new areas. A public sector organization's mandate is politically directed and prioritized with new initiatives and directions coming from changes in government policy, approach and priorities. While maintaining confidential or restricted-access information, the public sector organizations are constantly challenged to be accessible, to be open, and to provide access to its information to the public. With human resource and personnel costs often being the primary cost driver in the organization, a primary concern of the public sector organizations is to deploy and manage resources economically and efficiently as needed to achieve the mandates.
In addressing these pressures and priorities, public sector organizations tend to focus on meeting their prescribed mandate; controlling resources to stay within their budget authority; optimizing the utilization of their resources—people, facilities, and information; and providing information to other government agencies and to the public on their programs and accomplishments.
Thus, in managing their diverse organizations, public sector entities face the constant pressure to reduce cost while delivering higher value to the public. The public sector organizations are pressured to reduce operational costs and complexities in order to permit a higher percentage of resources to be dedicated for delivering the front line work—meeting their mandate. Compounding the complexity is a need to accommodate changes in programs, priorities, and oftentimes, reorganization and consolidations with other public sector entities. Overall, these pressures require programs, systems and controls that ensure that the mandate is being carried out and reported on with due regard for economy, efficiency and effectiveness.
Several methods have been used to measure the benefits of technology expenditures to a public sector entity. In one method, an auditing approach has been used to document the potential savings in these types of organizations. This approach usually involves a “picture in time” type of measurement study where functions are looked at in detail with the potential savings estimated. The studies tend to be organizationally focused meticulously detailing the potential savings throughout an organization and its agencies. These studies tend to have relatively high costs because of the time and expense needed to document the operating areas and to create well-suited cost measures that can be used as the basis for formulating the savings for the particular entity. Once the snapshot has been taken, the study tends to become a reference document. While taking an audit or a snapshot-in-time can help to estimate the scope of possible savings with a technology acquisition, the organization is left with little direction on implementing the technology expenditure as needed to achieve the desired goals. Unless there is a follow up program that helps transition and manage the change to realize the benefits, such studies simply become volumes that document a theoretical potential. Unless the work is built on a framework that will allow the organization to implement and manage the change, little lasting value will have been done.
Another approach that has been used to measure the benefits of technology expenditures is to employ industry-based business practices as the framework for estimating the value of change. For instance, businesses commonly use return-on-investment (ROI) tools that attempt to estimate the benefits of technology expenditure as realized through resulting decreases in costs (e.g., through lower personal costs) or increased revenues (e.g., through increased sales) In the context of the public sector organizations, this approach attempts to quantify the benefits of technology expenditure by applying industry-based business processes to public sector organizations. This approach tends to focus more on the operational business processes, but building such a framework raises numerous issues for public sector organizations. The first issue that immediately gives concern is that the business processes in public sector tend to be very different as to how they are used industry. While the two methods perform similar tasks, the two go about executing those tasks very differently. Consequentially, an industry-based business process view often does not work because the business processes and rationale across public sector organizations vary widely.
The second issue implicit in this approach is that not only are industry business processes used, but also the measurement metrics are based on industry standards. It is relatively easy in private industry to develop a set of metrics that can be used to measure the potential payoff from a technology acquisition. For example, a business can focus on inventory costs, examine potential reductions in inventory investment by, and value these savings at their cost of capital, thereby creating a measure and a target for the savings that the organization can attribute to the technology acquisition. In doing so, the target can be based on a range of metrics already available within their industry from similar firms doing similar activities. Thus the organization can easily look to existing metrics and targets on which to base a change strategy and programs. This application of this approach applies to public sector organizations is of concern since there are few generally accepted metrics for business processes within the public sector. Even if solid, comparable metrics could be devised, application of the metrics to deliver savings complicates the problem. Specifically, very few public sector organizations use the same business functions and metrics. For instance, the cost of capital may not be a useful metric to public organizations since the capital supplied to the organizations tends to be operational, budgetary funding that is fiscal year based. Likewise, reducing inventory investment by some factor may not have as much value in the public sector. Accordingly, there is a current need for approaches tailored and refined for public sector needs.
The case for measuring the benefits of technology expenditures can be made in the public sector, but it needs to take a different approach to building the case from that used in industry. As suggested above, it is rarely possible to use industry metrics and port them over. The industry metrics generally do not work since the tasks for the public sector organization generally do not have parallels in industry. Nor do they have consistent measurement bases—metrics across the public sector are often inconsistent as there are generally few comparable organizations on which a metric can be based. Finally, the majority of the cost structure in public sector organizations tends to be human resource and other people-related costs based since the cost of service delivery tends to dominate the cost structure. The efficiency gains in public sector from technology expenditures therefore tend to come from enhanced utilization and productivity gains that augment the delivery of increased and improved services to the public. For instance, public sector organizations may move more of the back office support chores to front line tasks, thus freeing up resources to deliver better services within tight budgets. For example, enhanced service delivery from technology efficiency gains may permit a policing organization to transfer costs associated with administration to those associated with police service delivery; i.e., reduce the level of administration costs to free up resources to support more police, more cruisers, better response equipment, etc.
As described above, the potential benefits from technology expenditure by a public sector entity cannot be easily measured using a finite single point in time snapshot study approach. Furthermore, these potential benefits do not appear overnight, but instead, tend to take time to effect. Generally, instantaneous overnight disruption in the public sector is not acceptable—migrating to lasting change is the goal. Thus, the focus for change in public sector can only come about if the technology expenditure builds in both a vision or plan that assesses the opportunity for benefits realization (i.e.: the business case), integrates it with a technology implementation program, and delivers a program to realize the benefits to effect lasting change. Otherwise a stand-alone business case becomes an exercise to secure funding rather than one of delivering lasting value. For these reasons, developing the business case for technology expenditures in the public sector must transition to a benefits realization program that includes: (1) Documenting the expected technology expenditure benefits for the enterprise; (2) Integrating benefits realization with the technology expenditure program; and (3) Building a sustainable benefits realization and monitoring program.
For optimal effect, the approach should be built at the outset at the beginning of the technology expenditure program. For instance, if the technology expenditure includes the acquisition and selection of new software, the other technology expenditure should be integrated to the specifics of that software. The program should be sustained with enhancements and developments through the implementation of the other technology acquisitions. Once the system has gone live, the benefits realization program needs to have sufficient depth of tools and process so that the expected change program can be monitored, and real values and benefits delivered. The work should not stay as a theoretical framework—real lasting value needs to be the result. Business case development in the public sector needs to build a program of sustainable continuous improvement so that the benefits can be realized.
In summary, the development of an technology expenditure business case for a public sector organization requires a methodology that: (1) Is tailored to the needs of public sector organizations; (2) Addresses public sector business functions from their operational and organization perspective; (3) Develops metrics that meet the needs for that specific organization; (4) Starts the program at the beginning of the technology expenditure; (5) Integrates the business case with the specific technology acquisitions to be implemented; (6) Optimizes the measurement and business process delivery throughout the implementation of technology acquisition; (7) Implements a concrete benefits delivery program; and (8) Implements tools and processes that can be used to implement, monitor and measure the effect of change.